Author: Thomas Boersma, Solarplaza
Hannah: The Electric Power Research Institute (EPRI) is an independent, non-profit, international research organization headquartered in Palo Alto, California. EPRI conducts research and development and pursues demonstration projects for the benefit of the public. Formed after a historic U.S. blackout in 1965, EPRI was created in response to the growing dependence on electricity and the lack of unified planning and research to support the sector. EPRI’s research spans across the energy industry, including nuclear, fossil-based, and renewable generation technologies; transmission and distribution asset performance, control, and planning; and end-use customer technologies -- all in support of a safe, reliable, affordable, and environmentally responsible electric power system.
As blockchain has advanced through the “hype cycle,” it has attracted the interest of the energy industry and comes up more frequently in our discussions with utilities and other stakeholders. In an initial investigation of the technology and ongoing activities, it became clear that EPRI, as a thought leader across the energy industry, is well-positioned to evaluate and analyze the expanding applications of blockchain technology. With our deep experience and knowledge, we research topics from asset registry of distribution poles to integrating distributed energy resources (DERs) and electric vehicle charging, as well as applications such as carbon and emissions trading.
“As blockchain moves forward, it is important to leverage collaborative frameworks like UBIG to identify and understand the opportunities and challenges inherent to the technology.”
I am the project lead for the Utility Blockchain Interest Group (UBIG) at EPRI. UBIG is a utility-focused interest group that uses a collaborative approach to accelerate industry learning and applications by sharing use cases, lessons learned, and developing best practices. UBIG has grown to more than 150 members from 58 U.S. and international utilities. As blockchain moves forward, it is important to leverage collaborative frameworks like UBIG to identify and understand the opportunities and challenges inherent to the technology.
Hannah: The added value of blockchain differs among use cases. Most generally, we can see the value stemming from blockchain’s fundamental components of traceability, immutability, security, and efficiency.
Smart contracts would seem to favor a world filled not just with energy “prosumers” -- those who may both produce and consume energy -- but also with an increasing number of distributed energy resources and IoT devices. Smart contracts enable greater transparency and efficiency in this changing landscape. As the number of distributed energy resources (DERs) increases and the grid becomes less centralized, blockchain has the ability to track and monitor distributed assets.
“Smart contracts enable greater transparency and efficiency in this changing landscape.”
With all these benefits, however, we still come to the question of scalability and transaction speed, which ultimately will determine the added value of blockchain. As blockchain is used more widely and the number of transactions increases, there has been a noticeable delay in the time it takes to confirm a transaction, leading to scalability concerns. At a certain point, we have to consider whether this is efficient compared to traditional centralized methods. If these concerns are addressed, there might be an opportunity for blockchain to add value in the energy sector.
Hannah: This question is extremely difficult to answer as the regulations and interests vary among local, state, and country jurisdictions. If we look at current investment in blockchain applications for the energy sector, transactive energy or peer-to-peer transactions appear to be favored. But will these be the first to reach the market? I don’t think so. It’s a complex problem with lots of moving parts and even more stakeholders.
“As I look across the many potential uses cases, I find EV charging to be interesting and a possibly emerging focus area.”
Instead, it is possible that applications related to supply chain or asset registry will emerge as the industry can apply lessons learned from other industries already testing blockchain applications. As I look across the many potential uses cases, I find EV charging to be interesting and a possibly emerging focus area as the number of EV’s and investment in charging infrastructure increases.
Hannah: As we look at the number of pilots and activities occurring in both regions, we can see that Europe is further along in testing and deploying blockchain technology, but the number of U.S. demonstrations and pilots is increasing. The utility structure in Europe is very different than in the U.S., and in some cases are structured in a way that allows them to move faster in experimenting with new technologies. I think regulation is key, and it is important for regulators to get up to speed and investigate blockchain -- what it is, how it works, the impact it could have, the risk that it introduces, etc.
“The utility structure in Europe is very different than in the U.S., and in some cases are structured in a way that allows them to move faster in experimenting with new technologies.”
In the US, we are beginning to see some activity in the space with regulators in Arizona opening a docket in July 2018 to investigate blockchain, followed closely by the Nevada Public Utility Commission in September. We also are seeing municipally owned utilities in cities like Santa Clara, California and Burlington, Vermont beginning to get engaged. I think it is reasonable to assume that the number of pilots will increase in the U.S., although at a slower pace than what we’re seeing in Europe. Consortia and interest groups like UBIG are extremely important in helping this happen, addressing the challenges by sharing information. Using a collaborative framework, we hope to avoid the “piloting to death” scenario, common to emerging technologies in this industry, and begin to draw and share valuable insights.
Hannah: I look forward to learning more about the differences in regulations that promote or inhibit the use of blockchain and, more specifically, peer-to-peer energy transactions. A significant component in analyzing, evaluating, and educating others about blockchain technology is sharing lessons learned and comparing the challenges and opportunities each have faced. Whether the energy industry will use blockchain will depend on understanding the practical value. Through these panels, I hope to learn from blockchain experts they are assessing use cases, deciding when blockchain has added value, building the business case, and measuring success.